Smoke is an enenra
The Enenra are creatures of smoke and vapor who possess a shapeless form. They are at times created from the souls of slain mortals and can return to their physical forms.
Tomas Vrbada from Prague was once taken as a boy by an obscure cult who intended to sacrifice him to a demon. As he was burnt alive, he returned as an Enenra and in his rage he slew his killers. After his murder was avenged, he returned to his mortal form but his memory of the incident was lost and he became unaware of his former life.
After defeating Shao Kahn, the Lin Kuei warrior known as Smoke regained his memory and remembered his past life as well as the origin of his powers.
Behind the scenes
Smoke attacks his kidnappers in his shapeless form in his MK 2011 ending
The background of the Enenra comes from Smoke´s ending in MK 2011 and serves as a backstory to explain the origin of his powers.